It takes place in Vice City, Leonida. Which is a take on Miami, Florida.
Rockstar said they were "going back to Vice city and more" so it's possible there will be at least one other city to visit. Leading theories are two of the other cities from San Andreas; either San Fierro or Las Venturas. Possibly both.
Though if Vice City is just part of the map. Which is comprised of the State of Leonida, it's likely it will be completely new areas, as San Fierro and Las Venturas are established to be in the State of San Andreas.